25 October: Housing across South East, South West and East England could be less affordable than London by 2026

National Housing and Planning Advice Unit

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Regions urged to consider plans that deliver a quarter of a million more homes by 2020

Housing affordability in the South West, South East and East could become worse than London by 2026 if current housebuilding levels are not increased, according to the independent National Housing and Planning Advice Unit (NHPAU).

In its response to the Government's Housing Green Paper Homes for the Future, the NHPAU concludes that - based on current housing plans in the emerging Regional Spatial Strategies - by 2026, average house prices could rise to 11.3 times earnings* in the East of England, 12.4 times in the South East and 12.9 in the South West. All these exceed London at 11.0.

To help tackle the affordability problem, the NHPAU says that regional authorities will need to ensure that their delivery plans increase the level of housebuilding across the whole country.

The NHPAU has welcomed the Government's ambitions for increased housing, arguing that targets in the Green Paper are an important move to help stabilise affordability over the next decade.

Taking a view of longer-term prospects, its analysis suggests that even more homes will be required and that regional planning authorities should consider housing targets beyond those contained in the Green Paper. The Unit makes a case for consideration of 270,000 additional new homes a year by 2016, the equivalent of more than a quarter of a million additional homes above the target by 2020.

The Unit's analysis - in its publication Developing a target range for the supply of new homes across England - also identifies that it is not just quantity of housing but also its type, location and timing of delivery which will have a big impact on housing affordability. It is for regional authorities to consider all these matters.

By focusing increased levels of housebuilding in the least affordable regions, the NHPAU has shown how it might be possible to stabilise affordability over the long-term:

Examples of policy scenarios tested	2007	Projected Impact by 2026
270,000 new homes per year by 2016 - with the bulk of growth above Regional Spatial Strategies built in least affordable regions	7.1 times earnings*	8.2
240,000 new homes per year by 2016 - with the bulk of growth above Regional Spatial Strategies built in least affordable regions	7.1	9.1
200,000 new homes per year - plans under the current Regional Spatial Strategies	7.1	10.1
Former Regional Planning Guidance housing plans	7.1	10.9

Professor Stephen Nickell, chairman of the NHPAU, said:

"The Government's Green Paper and recent Comprehensive Spending Review show a real commitment to delivering more new housing that will represent important movement towards stabilising affordability over the next decade. However, over the long-term, housing supply needs to increase further.

"England is an aspirational, prosperous and growing nation and that means a demand for more housing. If we fail to act then a generation of buyers will be unable to get a foothold on the housing ladder, not just in London but across large swathes of England. And current home owners will not be able to move on to bigger and better homes.

"The Regional Assemblies, Development Agencies and planning authorities have the major responsibility here. They are best placed to understand local housing markets and the needs of their communities. Based on evidence, collectively they may decide to push supply well beyond the Government's national target."

Commenting on recent reports of a deterioration in the housing market Professor Nickell added:

"Any cooling in the housing market would only affect affordability in the very short term. Affordability is a complex and long-term issue, and we need to take a long-term view - which means we need to build more houses now."

The Green Paper identifies a new role for the NHPAU in advising Government about the range of supply that should be considered in the planning process. Today's publication of the Unit's response to the Green Paper marks the start of a dialogue with the regional partners over the coming months which will lead to the Unit firming up its first advice to central Government by next spring.

*Ratio of lower quartile house prices to earnings.

- Ends -

For further information contact Rob O'Halloran / Jo Lloyd, Camargue, tel 020 7636 7366.

Notes to editors

About the National Housing and Planning Advice Unit (NHPAU)

The NHPAU is a new independent body that has been set up to help make homes more affordable across England. It is made up of some of the country's leading economists who will provide expert guidance to regional and national bodies to ensure we deliver the right homes, in the right place, at the right time.

Since April this year, planners and government have to consider affordability when deciding future housing supply. The job of the NHPAU is to tell them how they might achieve this and make a positive impact on housing affordability in England.

The Unit is chaired by Professor Stephen Nickell, CBE, FBA a former member of the Bank of England Monetary Policy Committee. He is currently Warden of Nuffield College Oxford.

Why the NHPAU was created

1. The Government wants to make housing more affordable across the country. What this means is building enough new homes, in the right places, to meet demand.

2. Between 1995-2005, average incomes rose 92 per cent but average house prices rose 204 per cent (source: National Statistics). There is a disconnect between what we are paid, and what we pay for our housing.

3. Economist Kate Barker's Review of Housing Supply in 2004 identified that the demand for housing is outpacing supply, and this is pushing up prices.

4. Barker's review produced a series of recommendations about improving the supply of housing in England. This included the creation of a body to provide expert advice on housing matters, particularly affordability. The NHPAU is the result.

What the NHPAU will deliver

1. The NHPAU is an expert body whose job is to tell decision-makers how they can make housing more affordable.

2. There is currently no single economic measure to determine housing affordability. The NHPAU will review all the information and advise on the best measures for planners and government to assess affordability.

3. The Unit will deliver a new research programme as a resource for regional partners and others on housing market affordability. It will also develop a toolkit to allow forward-looking economic and statistical analysis on the impact of planned housing provision.